Tips To Help You Manage Your Credit Card Wisely

Having a credit card can be a very important financial tool for many individuals. In general, credit cards are safe, reliable, and convenient to use. The responsible use of a credit card will reflect positively on your credit report, putting you in a better position should you need to secure a larger loan such as a mortgage or car loan. However, for some people, managing a credit card is harder than getting one.

Anytime you use a credit card, you are borrowing money you are obligated to repay. What you purchase does not matter – you could spend $600 for a new phone or $5 at Dunkin’ Donuts – If you don’t pay your balance in full each month, your creditor will add interest to the total amount you owe and it was negatively affect your credit score. That’s why it’s very important to keep track of the minimum monthly payments on your credit card and to pay them on time. The key to managing your credit card is making sure you don’t spend more money than you have.

Credit Cards

Manage your credit cards

  • Limit the number of cards you have. The more cards you have, the more overwhelming it will be to keep track of what you owe. The average person usually has between 3-5 credit cards using 1-2 bank cards and a 2-3 store credit cards. Try not to go over that average or you’ll be piled in bills before you know it.
  • Keep track of your monthly credit card spending. Understand when and why you will be making purchases with a credit card, and make sure to budget appropriately for the monthly bill. Keep your receipts, and avoid the temptation to impulse buy and overspend for items you don’t truly need.
  • Choose The Credit Cards Wisely. When selecting a credit card, be aware that all cards are not the same. Compare different cards based on your needs and the card terms. Look for the following: APR, which is the amount of interest you will pay if you do not pay your balance in full each month.
  • Don’t spend more than you can afford to pay each month. Responsible use of your credit cards will help you establish a solid credit rating and avoid financial problems. In addition, using your credit cards regularly for items such as food, gasoline, and utilities, could be a sign that your monthly budget needs reviewing. Some bank apps may even give you an estimate of how much you are spending over your limit each month. Make sure you take a look at that number and budget accordingly.

Warning Signs That You Might Be Stretching Your Limit With Credit Card Use

Credit Cards

Don’t stretch your limit with too many credit cards

  1. Only paying the monthly minimum — Sure, if you’re tight on money for a few months this isn’t going to substantially hurt your credit score, but if you can’t seem to make your balance go down after a year of paying only the monthly minimum, there’s a problem.
  2. Near or over limit — Your credit limit was set based on your financial income, history and background. If you are spending near or over your limit every month, this could be worrisome. If you notice that you have this problem, stop using the credit card for a few months and focus on getting the balance down to 50% of your limit.
  3. You rely on cash advances — You use your credit card cash advance to pay your other bills. Stop doing it – it will turn into a vicious cycle of debt.
  4. You’ve recently been denied credit — If a creditor declines you, it means that they feel that your finances are either stretched to the limit or beyond.


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